Sales growth for Card Factory despite ‘challenging’ environment
Wakefield-headquartered retailer Card Factory has reported a 5.5% rise in total group sales for the first half of 2019, despite a tough consumer environment.
The listed specialist seller of greeting cards, dressings and gifts, also confirmed like-for-like sales were up 1.5%, along with a further expansion of its store network, with 26 net new UK shops opened.
The business said it was on track for a target of about 50 net new stores across the UK and Republic of Ireland for the full year, and expects a return of surplus cash to shareholders towards the end of the 2020 financial year.
However, it also noted it has incurred additional costs related to storage of increased stock levels, which includes preparation for the potential impact of Brexit.
Karen Hubbard, Card Factory‘s Chief Executive Officer, said: “Our quality and value proposition continues to resonate well with customers – reflected by the good performance of our seasonal ranges in the first half of the year.
“We continue to work hard at making sure we have the right ranges at the right prices for our customers, in the store and online.
“Alongside that, we remain focused on our important commercial and business efficiency initiatives – all of which will make Card Factory a much stronger business for the long term.
“We continue with the trials within Aldi and The Reject Shop in Australia, a further update will be given at our interims announcement in September.
“Looking forward to the forthcoming key quarter four trading period, which will have a significant impact on the out-turn for the full year, we believe we have the right ranges and products to deliver a good performance; although, we are cognisant of economic and political uncertainty and weaker consumer confidence.
“The Board anticipates profits for the full year to be broadly in line with its previous expectations.”
Card Factory said it was encouraged by the positive response from its online customers to the improvements it has made to its online ranges, resulting in improved sales conversion and average order value.
It said the trading performance of its Getting Personal range remains challenging, with sales down 10.5%, hit by continued intense price competition and high costs of customer acquisition.
As of 31 July 2019, before deducting capitalised debt costs, net debt for the business totalled £170.3m (31 July 2018: £159.8m, 31 January 2019: £141.3m).
Card Factory said this reflects strong operating cash generation during the period and the unwind of the favourable working capital movement highlighted at the full year results, together with the 2019 financial year final dividend of £21.9m being paid in the period.
